UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 20, 2007
Donegal Group Inc.
(Exact name of registrant as specified in its charter)
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DE |
0-15341 |
23-0242471 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
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1195 RIVER RD MARIETTA, PA |
17547 |
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| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 717-426-1931
________________________________________________________________________________
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02 Results of Operations and Financial Condition
On February 20, 2007 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press release dated February 20, 2007
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Donegal Group Inc.
(Registrant) |
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February 20, 2007
(Date) |
/s/ JEFFREY D. MILLER
Jeffrey D. Miller Senior Vice President and Chief Financial Officer |
| Exhibit Index | ||
| 99.1 | Press release dated February 20, 2007 | |
EXHIBIT 99.1
Donegal Group Inc. Announces Fourth Quarter and Full Year Earnings
MARIETTA, Pa., Feb. 20, 2007 (PRIME NEWSWIRE) -- Donegal Group Inc. (Nasdaq:DGICA) (Nasdaq:DGICB) today reported net income for the fourth quarter and year ended December 31, 2006.
Net income for the fourth quarter of 2006 was a record $11,045,651, or $.43 per share on a diluted basis, an increase of 12.1% over the $9,851,977, or $.39 per share on a diluted basis, reported for the fourth quarter of 2005. The Company's fourth quarter earnings represented a continuation of the excellent underwriting results achieved throughout 2006. Revenues for the fourth quarter of 2006 were $84,203,995, an increase of 3.1% over a year earlier, with premiums earned of $76,197,821, a 2.0% increase over the fourth quarter of 2005.
Net investment income increased 14.3% to $5,895,564 for the fourth quarter of 2006, compared to $5,159,030 for the fourth quarter of 2005. The increase is attributable to an increase in invested assets and a modest increase in the Company's average investment yield throughout 2006.
The Company's combined ratio improved to 88.2% for the fourth quarter of 2006, compared to 89.4% for the fourth quarter of 2005. The Company's loss ratio for the fourth quarter of 2006 was 54.9%, improving significantly from the loss ratio of 60.4% reported for the fourth quarter of 2005. The improvement in the loss ratio for the fourth quarter of 2006 is attributable to lower claims frequency and favorable loss development during the quarter. The Company's expense ratio was 32.8% for the fourth quarter of 2006, reflecting a slight increase over its expense ratio of 32.7% for the first nine months of 2006. The Company's expense ratio of 28.4% for the fourth quarter of 2005 benefited from a $2.0 million reduction of estimated guaranty fund assessments.
Net income for the year ended December 31, 2006 increased 8.8% to a record $40,214,722, or $1.57 per share on a diluted basis, compared to $36,949,497, or $1.49 per share on a diluted basis, for the year ended December 31, 2005.
The Company's combined ratio for the full year 2006 was 89.0%, compared to a combined ratio of 89.5% for 2005. The Company's loss ratio for the full year 2006 improved to 55.8%, compared to 56.9% for 2005.
"We are pleased to report record earnings for the fourth quarter and are especially pleased to report the achievement of five consecutive years of record annual earnings. We are maintaining our focus on underwriting discipline as we continue to pursue opportunities to grow profitably in competitive market conditions," stated Donald H. Nikolaus, President and Chief Executive Officer of Donegal Group Inc.
The excellent operating results throughout 2006 contributed to an increase in the Company's book value to $12.70 per common share at December 31, 2006, compared to $11.30 per common share at December 31, 2005.
All 2005 per share information has been restated to reflect a 4-for-3 stock split effected in the form of a 33 1/3% stock dividend on April 26, 2006.
The Company will hold a conference call and webcast on Tuesday, February 20, 2007, beginning at 11:00 A.M. Eastern Time. You may participate in the conference call by calling 1-800-599-9795 (Passcode 75303920) or listen via the Internet by accessing the "Earnings Release Webcast" link in the Investor Relations area of the Company's web site at www.donegalgroup.com. An instant replay of the conference call will be available until February 27, 2007 by calling 1-888-286-8010 (Passcode 70305856).
Donegal Group Inc. is an insurance holding company whose insurance subsidiaries offer personal and commercial property and casualty lines of insurance in five Mid-Atlantic states (Delaware, Maryland, New Hampshire, New York and Pennsylvania), eight Southeastern states (Alabama, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, Virginia and West Virginia) and five Midwestern states (Iowa, Nebraska, Ohio, Oklahoma and South Dakota).
All statements contained in this press release that are not historic facts are based on current expectations. Such statements are forward-looking in nature (as defined in the Private Securities Litigation Reform Act of 1995) and necessarily involve risks and uncertainties. Actual results could vary materially. The factors that could cause actual results to vary materially include, but are not limited to, the ability of the Company to maintain profitable operations, the adequacy of the Company's reserves for losses and loss adjustment expenses, business and economic conditions in the areas in which the Company operates, severe weather events, competition from various insurance and non-insurance businesses, terrorism, the availability and cost of reinsurance, legal and judicial developments, changes in regulatory requirements and other risks that are described from time to time in the Company's filings with the Securities and Exchange Commission. The Company disclaims any obligation to update such statements o r to announce publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Donegal Group Inc.
Financial Highlights
(unaudited)
Three Months Ended December 31
------------------------------
2006 2005*
------------ ------------
Net premiums earned $ 76,197,821 $ 74,713,365
Investment income, net of
investment expenses 5,895,564 5,159,030
Net realized investment gains 794,798 567,561
Total revenues 84,203,995 81,709,601
Net income $ 11,045,651 $ 9,851,977
Net income per common share:
Basic $ 0.44 $ 0.41
Diluted $ 0.43 $ 0.39
Year Ended December 31
----------------------------
2006 2005*
------------ ------------
Net premiums earned $301,478,162 $294,498,023
Investment income, net of
investment expenses 21,320,081 18,471,963
Net realized investment gains 1,829,539 1,802,809
Total revenues 329,967,034 319,847,194
Net income $ 40,214,722 $ 36,949,497
Net income per common share:
Basic $ 1.61 $ 1.54
Diluted $ 1.57 $ 1.49
* Per share information restated for 4-for-3 stock split
Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
Quarter Ended December 31
--------------------------
2006 2005*
----------- -----------
Net premiums earned $ 76,198 $ 74,713
Investment income, net of
investment expenses 5,895 5,159
Net realized investment gains 795 568
Lease income 254 243
Installment payment fees 1,062 1,027
----------- -----------
Total revenues 84,204 81,710
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Net losses and loss expenses 41,793 45,125
Amortization of deferred policy
acquisition costs 12,575 11,943
Other underwriting expenses 12,404 9,249
Other expenses 564 496
Policyholder dividends 396 440
Interest 740 636
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Total expenses 68,472 67,889
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Income before income tax expense 15,732 13,821
Income tax expense 4,686 3,969
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Net income $ 11,046 $ 9,852
=========== ===========
Net income per common share:
Basic $ 0.44 $ 0.41
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Diluted $ 0.43 $ 0.39
----------- -----------
Supplementary Financial Analysts' Data
Weighted average number of
shares outstanding:
Basic 25,195,027 24,344,565
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Diluted 25,746,193 25,087,196
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Net written premiums $ 70,745 $ 70,172
----------- -----------
Book value per common share
at end of period $ 12.70 $ 11.30
----------- -----------
* Share and per share information restated for 4-for-3 stock split
Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
Year Ended December 31
--------------------------
2006 2005*
----------- -----------
Net premiums earned $ 301,478 $ 294,498
Investment income, net of
investment expenses 21,320 18,472
Net realized investment gains 1,830 1,803
Lease income 982 951
Installment payment fees 4,357 4,123
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Total revenues 329,967 319,847
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Net losses and loss expenses 168,421 167,542
Amortization of deferred policy
acquisition costs 48,595 47,234
Other underwriting expenses 49,971 47,163
Other expenses 2,118 1,676
Policyholder dividends 1,438 1,621
Interest 2,802 2,266
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Total expenses 273,345 267,502
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Income before income tax expense 56,622 52,345
Income tax expense 16,407 15,396
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Net income $ 40,215 $ 36,949
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Net income per common share:
Basic $ 1.61 $ 1.54
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Diluted $ 1.57 $ 1.49
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Supplementary Financial Analysts' Data
Weighted average number of
shares outstanding:
Basic 24,968,439 24,058,732
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Diluted 25,572,481 24,833,580
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Net written premiums $ 307,407 $ 302,544
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Book value per common share
at end of period $ 12.70 $ 11.30
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* Share and per share information restated for 4-for-3 stock split
Donegal Group Inc.
Consolidated Balance Sheets
(unaudited; in thousands)
December 31,
2006 2005*
-------- --------
ASSETS:
Investments:
Fixed maturities:
Held to maturity, at amortized cost $169,178 $180,182
Available for sale, at fair value 331,670 295,097
Equity securities, at fair value 40,542 33,371
Investments in affiliates 8,463 8,442
Short-term investments, at cost, which
approximates fair value 41,485 30,654
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Total investments 591,338 547,746
Cash 532 3,811
Premiums receivable 49,948 47,124
Reinsurance receivable 97,677 94,137
Accrued investment income 5,769 5,521
Deferred policy acquisition costs 24,739 23,477
Prepaid reinsurance premiums 44,377 40,063
Property and equipment, net 5,146 5,234
Deferred tax asset, net 9,086 11,533
Other assets 3,086 2,776
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Total assets $831,698 $781,422
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Donegal Group Inc.
Consolidated Balance Sheets (continued)
(unaudited; in thousands)
December 31,
2006 2005*
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Losses and loss expenses $ 259,022 $ 265,730
Unearned premiums 196,903 186,660
Accrued expenses 12,754 12,706
Subordinated debentures 30,929 30,929
Due to affiliate 1,567 728
Other liabilities 9,721 6,773
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Total liabilities 510,896 503,526
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Stockholders' equity:
Preferred stock -- --
Class A common stock 198 192
Class B common stock 56 56
Additional paid-in capital 152,392 141,933
Accumulated other comprehensive income 5,061 2,532
Retained earnings 163,987 134,075
Treasury stock, at cost (892) (892)
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Total stockholders' equity 320,802 277,896
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Total liabilities and
stockholders' equity $ 831,698 $ 781,422
========= =========
* Capital accounts restated for 4-for-3 stock split
CONTACT: Donegal Group Inc.
Jeffrey D. Miller, Senior Vice President
& Chief Financial Officer
(717) 426-1931
Fax: (717) 426-7009